This loan calculator estimates the fixed monthly payment on an installment loan such as a car loan or a personal loan. It uses the amount borrowed, the annual interest rate, and the term in years. The payment stays level until the balance reaches zero, as long as the rate does not change and every payment is made.
It answers a different question from a mortgage page even though the algebra is the same. Auto and personal loans are usually shorter, the amounts are smaller, and people compare a three-year term with a five-year term rather than 15 years with 30. The page does not price a vehicle, check a credit score, or model a revolving credit-card balance.
How to use this calculator
- Enter the loan amount in US dollars. The sample is 25,000.
- Enter the annual interest rate as a percent. A 7.5% rate is entered as 7.5.
- Enter the term in years. Five years is 60 monthly payments.
- Press Calculate. Read the monthly payment, then the total repayment and total interest.
How an installment-loan payment is calculated
The annual rate is divided by 100 and then by 12 to get the monthly rate. The term in years is multiplied by 12 to get the number of payments. Those values go into the standard amortizing-payment formula. Interest each month is the monthly rate times the remaining balance, and the rest of the payment reduces principal.
A longer term lowers the payment and raises the interest you pay if the rate stays the same. A shorter term does the opposite. The calculator does not know whether the rate is a dealer rate, a credit-union rate, or a rate that required you to buy add-on products. It only amortizes the numbers you type.
A zero rate is allowed. The payment becomes the principal divided by the number of months, and interest is zero. That is the right model for a true 0% promotional installment plan. It is the wrong model for a credit card, which charges interest on a revolving balance and lets the payment change.
Whether the payment fits a budget is a second sum this form does not do. Divide the monthly payment by monthly take-home pay, not by gross salary. Gross pay still includes tax. On the sample loan the payment is $500.95. If monthly take-home is $3,200, the share is 500.95 / 3,200 = 0.156546875, which is 15.65% to two decimal places. Against a $4,000 gross month the same payment is only 12.52%, and that smaller share is the wrong check because the tax has not been removed. For a salary taxed in England, Wales, or Northern Ireland, the 2026/27 take-home page estimates income tax and employee National Insurance in pounds. Compare a pound payment with a pound take-home. Do not subtract this dollar result from that sterling figure.
Formula
Monthly rate r = annual percent / 100 / 12 Payments n = years × 12 If r = 0: payment M = principal / n Otherwise: M = principal × r × (1 + r)^n / ((1 + r)^n − 1) Total repayment = M × n Total interest = total repayment − principal
Total repayment uses the unrounded payment. The headline payment is then rounded to the cent on its own, so payment times number of months can be a few cents away from the displayed total. On the sample five-year loan, $500.95 times 60 is $30,057.00, while the displayed total is $30,056.92.
The formula assumes one payment per month and a rate that is a nominal annual rate compounded monthly. A loan quoted with a daily periodic rate, a weekly payment, or a single payoff date needs a different calculation.
Worked personal and auto loan examples
$25,000 at 7.5% for five years
This is the form's sample: principal 25,000, annual rate 7.5, term 5 years, which is 60 payments. The calculator shows $500.95 / month, total repayment of $30,056.92, and total interest of $5,056.92.
You pay back a bit more than $5,000 on top of the $25,000 you borrowed. That interest total is the cost of spreading the loan over five years at 7.5%, before any origination fee or late fee.
The same $25,000 loan paid in three years
Change only the term to 3 years (36 payments). The calculator shows $777.66 / month, total repayment of $27,995.60, and total interest of $2,995.60.
The payment rises by $276.71, and interest falls by $2,061.32 compared with the five-year loan. Whether the higher payment is affordable is a budget question the formula cannot answer. The math only shows the trade.
An $18,000 car loan and a smaller two-year loan
An $18,000 balance at 6.9% for 4 years produces $430.20 / month, total repayment of $20,649.49, and total interest of $2,649.49. A dealer quote that is far from $430.20 either uses a different rate or term, includes add-on products in the amount financed, or is not a simple monthly installment loan.
An $8,000 loan at 11% for 2 years produces $372.86 / month, total repayment of $8,948.70, and total interest of $948.70. The rate is higher than the car-loan example, but the short term keeps the interest under $1,000. Comparing only the monthly payment would hide that.
Installment loan comparison
| Amount and rate | Term | Monthly payment | Total repayment | Total interest |
|---|---|---|---|---|
| $25,000 at 7.5% | 5 years | $500.95 | $30,056.92 | $5,056.92 |
| $25,000 at 7.5% | 3 years | $777.66 | $27,995.60 | $2,995.60 |
| $18,000 at 6.9% | 4 years | $430.20 | $20,649.49 | $2,649.49 |
| $8,000 at 11% | 2 years | $372.86 | $8,948.70 | $948.70 |
Limits of a simple loan payment
Sales tax, title fees, extended warranties, and credit insurance are included only if you add them into the loan amount yourself. A down payment should be subtracted before you enter the principal. The calculator will not do either adjustment for you.
Credit cards, buy-now-pay-later plans with a deferred interest cliff, and loans with a balloon payment do not follow this formula. Neither do loans whose payment is weekly or biweekly. If your contract says the rate is charged daily, do not expect this monthly formula to reproduce the lender's payoff quote.
Prepaying principal saves interest and can shorten the term, but this tool always assumes you pay exactly the scheduled payment for the full term and nothing more. It also cannot tell you whether a quoted APR already includes fees. The rate field is the rate used to compute interest, which may differ from an APR that folds in prepaid charges.
Frequently asked questions
Can I use this calculator for a car loan?
Yes, if the car loan is a fixed-rate installment loan with a monthly payment. Enter the amount financed after the down payment, the annual rate, and the term in years. Taxes and add-on products count only when they are part of that amount financed.
Does a shorter loan term always reduce the interest?
It does when the interest rate and the amount borrowed stay the same, because the balance is outstanding for fewer months. On $25,000 at 7.5%, three years of interest is $2,995.60 and five years is $5,056.92. A shorter term can still be a poor fit if the higher payment is unaffordable.
Why is this not a credit-card payoff calculator?
A credit card is revolving credit. The balance and the minimum payment change, and interest is often charged with a daily periodic rate. This form locks in one balance, one rate, and one term, then computes a single level payment that reaches zero on schedule.
What does a zero interest rate do on a personal loan?
The payment is the principal divided by the number of monthly payments, and total interest is $0.00. A $1,200 loan at 0% for one year is $100 a month. Enter the rate as 0, not as a blank field.
Are the payments assumed to be monthly?
Yes. The term in years is multiplied by 12, and the annual rate is divided by 12. A weekly payment plan needs a different period count and a weekly rate. Do not enter a number of weeks in the years field.
How do I compare this payment with take-home pay?
Divide the monthly payment by the monthly cash you receive after tax. The sample payment of $500.95 is 15.65% of a $3,200 take-home, because 500.95 / 3,200 × 100 = 15.6546875, which rounds to 15.65. It is a smaller percent of gross pay, and that comparison skips the tax. This loan form is in US dollars. A 2026/27 salary in England, Wales, or Northern Ireland can be turned into monthly take-home on the take-home pay calculator, then compared only with a payment that is also in pounds.
Related ClearCalc pages
- 2026/27 take-home pay calculator for England, Wales and Northern Ireland Estimates income tax and employee Class 1 National Insurance on an annual salary for that tax year.
- Percentage calculator Enter the monthly payment as the part and monthly take-home as the whole if you want the same ratio as a percent.